Long-Term Obligations and Other Short-Term Borrowings

12 Months Ended

Jun. 30, 2020

Long-Term Obligations and Other Short-Term Borrowings

6. Long-Term Obligations and Other Short-Term Borrowings

The following table summarizes long-term obligations and other short-term borrowings at June 30:



(in millions) (1)	2020		2019
2.4% Notes due 2019	$	—	$	450
4.625% Notes due 2020	—		508
2.616% Notes due 2022	834		1,079
3.2% Notes due 2022	236		247
Floating Rate Notes due 2022	321		340
3.2% Notes due 2023	576		551
3.079% Notes due 2024	809		781
3.5% Notes due 2024	413		402
3.75% Notes due 2025	529		494
3.41% Notes due 2027	1,215		1,318
4.6% Notes due 2043	340		346
4.5% Notes due 2044	342		342
4.9% Notes due 2045	441		445
4.368% Notes due 2047	560		594
7.0% Debentures due 2026	124		124
Other Obligations	35		10
Total	6,775		8,031
Less: current portion of long-term obligations and other short-term borrowings	10		452
Long-term obligations, less current portion	$	6,765	$	7,579

(1) Maturities are presented on a calendar year basis.

Maturities of existing long-term obligations and other short-term borrowings for fiscal 2021 through 2025 and thereafter are as follows: $10 million, $1.4 billion, $585 million, $814 million, $414 million and $3.6 billion.

Long-Term Debt

All the notes represent unsecured obligations of Cardinal Health, Inc. and rank equally in right of payment with all of our existing and future unsecured and unsubordinated indebtedness. The 7.0% Debentures represent unsecured obligations of Allegiance Corporation (a wholly-owned subsidiary), which Cardinal Health, Inc. has guaranteed. None of these obligations are subject to a sinking fund and the Allegiance obligations are not redeemable prior to maturity. Interest is paid pursuant to the terms of the obligations. These notes are effectively subordinated to the liabilities of our subsidiaries, including trade payables of $21.4 billion.

In June 2020, we redeemed $500 million aggregate principle amount of 4.625% Notes due December 2020 at a redemption price equal to 100% of the principal amount and accrued but unpaid interest, plus the make-whole premium applicable to the notes. In connection with the redemption, we recorded a $7 million loss on early extinguishment of debt.

During fiscal 2020, we also early repurchased $247 million of the 2.616% Notes due 2022, $11 million of the 3.2% Notes due 2022, $20 million of the Floating Rate Notes due 2022, $104 million of the 3.41% Notes due 2027, $6 million of the 4.6% Notes due 2043, $5 million of the 4.9% Notes due 2045, and $35 million of the 4.368% Notes due 2047. In connection with the early debt repurchases, we recognized a $9 million loss on early extinguishment of debt.

In November 2019, we repaid the full principal of the 2.4% Notes due 2019 at maturity for $450 million.

The redemption and repurchases were paid for with available cash and other short-term borrowings.

In fiscal 2019, we repurchased $67 million of the 2.616% Notes due 2022, $1 million of the 3.2% Notes due 2022, 8 million of the Floating Rate Notes due 2022, and $24 million of the 3.41% Notes due 2027 for a total of $100 million. The repurchases were paid for with available cash. The loss on early extinguishment of debt in connection with these early repurchases was immaterial. We also paid off the $1.0 billion 1.948% Notes due 2019 as they became due with available cash.

In June 2018, we repaid the full principal of the 1.95% Notes due 2018 at maturity for $550 million.

If we undergo a change of control, as defined in the notes, and if the notes receive specified ratings below investment grade by each of Standard & Poors Ratings Services, Moody’s Investors Services and Fitch Ratings, any holder of the notes, excluding the debentures, can require with respect to the notes owned by such holder, or we can offer, to repurchase the notes at 101% of the principal amount plus accrued and unpaid interest.

Other Financing Arrangements

In addition to cash and equivalents and operating cash flow, other sources of liquidity include a $2.0 billion commercial paper program

backed by a $2.0 billion revolving credit facility. We also have a $1.0 billion committed receivables sales facility.

In September 2019, we renewed our committed receivables sales facility program through Cardinal Health Funding, LLC (“CHF”) through September 30, 2022. CHF was organized for the sole purpose of buying receivables and selling undivided interests in those receivables to third-party purchasers. Although consolidated with Cardinal Health, Inc. in accordance with GAAP, CHF is a separate legal entity from Cardinal Health, Inc. and from our subsidiary that sells receivables to CHF. CHF is designed to be a special purpose, bankruptcy-remote entity whose assets are available solely to satisfy the claims of its creditors.

Our revolving credit and committed receivables sales facilities require us to maintain, as of the end of every fiscal quarter through December 2020, a consolidated net leverage ratio of no more than 4.00-to-1. The maximum permitted ratio will reduce to 3.75-to-1 in March 2021 and as of the end of every quarter thereafter. As of June 30, 2020, we were in compliance with this financial covenant.

At June 30, 2020 and 2019, we had no amounts outstanding under the revolving credit facility; however, availability was reduced by outstanding letters of credit of $1 million and $24 million at June 30, 2020 and 2019, respectively.

Under our committed receivables sales facility program, we had a maximum amount outstanding of $700 million and an average daily amount outstanding of $12 million during fiscal 2020. We also had no amounts outstanding under the committed receivables sales facility program; however, availability was reduced by outstanding standby letters of credit of $29 million and $30 million at June 30, 2020 and 2019, respectively.

Under our commercial paper program we had a maximum amount outstanding of $1.7 billion and an average daily amount outstanding of $183 million during fiscal 2020. We had no amounts outstanding under the commercial paper program as of June 30, 2020 and 2019.

We also maintain other short-term credit facilities and an unsecured line of credit that allowed for borrowings up to $6 million and $9 million at June 30, 2020 and 2019, respectively. The $35 million and $10 million balance of other obligations at June 30, 2020 and 2019, respectively, consisted of short-term borrowings and finance leases.